EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of April 1, 2004 (this
"Agreement"),between WORLDWATER CORP., a Delaware corporation with principal
executive offices at Pennington Business Park, ▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"),and SBI BRIGHTLINE VIII LLC, a Delaware limited
liability company with its principal offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser").
INTRODUCTION
Subject to the terms and conditions of this Agreement, the Company may
issue and sell to the Purchaser and the Purchaser shall purchase from the
Company the following: (i) up to 17,000,000 shares of the Common Stock (the
"Shares"), par value $0.001 per share (the "Common Stock"); (ii) warrants (the
"$0.17 Warrants") exercisable for an aggregate of 2,100,000 shares of Common
Stock at the exercise price of $0.17 per share, in the form attached hereto as
Exhibit A hereto; and (iii) warrants (the "$0.22 Warrants"), exercisable for an
aggregate of 1,500,000 shares of Common Stock at the exercise price of $0.22 per
share, in the form of Exhibit B hereto, and (iii) warrants (the "$0.27
Warrants", and, together with the $0.17 Warrants and the $0.22 Warrants, the
"Warrants") exercisable for an aggregate of 1,500,000 shares of Common Stock at
the exercise price of $0.27 per share, in the form attached hereto as Exhibit C
hereto. This Agreement, together with the Warrants, are hereinafter referred to
as the "Transaction Agreements".
NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the Company and the Purchaser hereby agree as follows:
ARTICLE I
ACQUISITION OF SECURITIES
SECTION 1.01 PURCHASE AND SALE.
(a) Schedule 1.01(a) attached hereto defines three tranches of Shares that
the Purchaser has agreed to purchase from the Company (each, a "Tranche") and,
with respect to each Tranche, sets forth the number of Shares constituting such
Tranche (the "Tranche Shares") and the purchase price per share for the Tranche
Shares in such Tranche (the "Tranche Purchase Price"). The number of shares in
each Tranche, and the purchase price for each share, shall be adjusted for any
stock split, stock dividend or reverse stock split occurring after the date
hereof and prior to the closing of a Tranche.
(b) The Company may, in its sole discretion, elect to sell the Tranche
Shares of any Tranche to the Purchaser at any time commencing on the date (the
"Effective Date") on which the Registration Statement (as defined in Section
3.01(a)) of the Company covering the resale of the Shares is declared effective
under the Securities Act of 1933, as amended (the "Securities Act"), and
terminating reasonably promptly thereafter, provided, however, (i) the Company
must elect to sell all of the Tranche Shares included in a Tranche if it elects
to sell any of the Tranche Shares in such Tranche; (ii) the Company must elect
to sell the Tranche Shares in the order that the Tranches are listed on Schedule
1.01(a); and (iii) the total beneficial ownership of the Purchaser of shares of
Common Stock shall not exceed 9.8% of the Common Stock, giving effect to the
acquisition of the Tranche or Tranches in question. Subject to the immediately
preceding sentence, the Company may elect to sell Tranche Shares included in
more than one Tranche at the same time. To effect its election to sell Shares,
the Company must give written notice thereof (an "Election Notice") to the
Purchaser. The Election Notice shall specify the Tranche or Tranches with
respect to which the election is being made and the date on which the closing of
the sale and purchase of the Tranche Shares shall occur; provided, such date
shall be a Business Day (as hereinafter defined) and shall not be earlier than
five days after the date such Election Notice is given to the Purchaser. An
Election Notice shall be irrevocable except as provided in Section 1.02(c). For
purposes hereof, the term "Business Day" shall mean any day which is not (i) a
Saturday or a Sunday or (ii) a day on which banking institutions are generally
authorized or obligated to close in the City of Los Angeles, California. Subject
to the foregoing and provided that the representations and warranties of the
Company set forth herein are true and correct as of the date of an Election
Notice and that all conditions to the respective obligations of the parties
hereto set forth herein have either been satisfied or waived, in the event that
the Company gives an Election Notice, the Purchaser shall be obligated to
purchase the Tranche Shares, covered by such notice.
(c) Simultaneous with the purchase of the Tranche Shares, the Company shall
deliver to the Purchaser the Warrants applicable to such Tranche.
SECTION 1.02 CLOSING PROCEDURES; THE CLOSINGS.
(a) Subject to the satisfaction or waiver of the conditions precedent set
forth in Article IV hereof, the closing of a purchase of Tranche Shares by the
Purchaser pursuant to this Agreement (each, a "Closing") shall occur at 10:00
a.m. on the date specified in the Election Notice delivered by the Company with
respect to such Tranche Shares unless the Company and the Purchaser have
mutually agreed on a different time or date with respect to such Closing (the
time and date of the Closing of a particular Tranche is referred to herein as
the "Tranche Closing Date"). Unless otherwise agreed by the Company and the
Purchaser, each Closing shall occur at the offices of Reitler ▇▇▇▇▇ LLC, New
York, New York, counsel to the Purchaser.
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(b) At each Closing, (i) each of the Company and the Purchaser shall
deliver to the other, as applicable, any documents required to be delivered by
Sections 4.01 and 4.02 hereof which have not been delivered prior to such
Closing, (ii) the Purchaser shall deliver to the Company an acknowledgement of
the applicable Tranche Purchase Price for the Tranche Shares being purchased at
the Closing and state the date, not to exceed three Business Days following the
Tranche Closing Date, on or prior to which the Tranche Purchase Price shall be
delivered by the Purchaser to the Company by wire transfer of immediately
available funds to an account designated in writing by the Company at or prior
to the Closing, and (iii) the Company shall deliver to the Purchaser one or more
stock certificates, determined in accordance with the instructions of the
Purchaser, representing the Tranche Shares being purchased or shall cause the
Tranche Shares being purchased to be electronically transferred to the
Purchaser. The payment of the Tranche Purchase Price referenced in clause (ii)
shall be deemed to have been delivered at the Closing for the purposes hereof.
(c) If a Closing does not occur on a proposed Tranche Closing Date because
the conditions specified in this Section 1.02(b) to be fulfilled by the
Purchaser and/or Article IV were not satisfied at the time of the applicable
proposed Tranche Closing Date, the Election Notice with respect to the Tranche
or Tranches proposed to be sold on such proposed Tranche Closing Date shall
automatically be revoked; provided, however, such revocation shall not impair
the right of the Company to give another Election Notice with respect to the
Tranche or Tranches covered by the revoked Election Notice or to compel the
Purchaser to purchase any Tranche Shares included in such Tranche or Tranches on
a subsequent Tranche Closing Date on which the conditions specified in such
sections and Article hereof are satisfied.
(d) If a Closing does not occur on a proposed Tranche Closing Date because
the conditions specified in Section 1.02(b) to be fulfilled by the Company
and/or Section 4.01 were not satisfied at the time of the applicable proposed
Tranche Closing Date, the Election Notice with respect to any Tranche or
Tranches proposed to be sold on such proposed Tranche Closing Date shall
automatically be revoked; provided, however, such revocation shall not impair
the right of the Company to give another Election Notice with respect to the
Tranche or Tranches covered by the revoked Election Notice or to compel the
Purchaser to purchase any Tranche Shares included in such Tranche or Tranches on
a subsequent Tranche Closing Date on which the conditions specified in such
sections and Article hereof are satisfied. In the event the Company is unable to
satisfy the conditions specified in such sections within 30 days following the
automatic revocation of an Election Notice, the Company may elect to terminate
this Agreement; provided, however, that the terms of Article III hereof will
survive such termination with respect to any Tranches that have been sold.
ARTICLE II
REPRESENATIONS AND WARRANTIES
SECTION 2.01 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Purchaser as follows: (a) (i) The Common
Stock has been registered under Section 12(g) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the Company is subject to the periodic
reporting requirements of Section 13 of the Exchange Act. The Company has
heretofore provided to the Purchaser true, complete, and correct copies of all
forms, reports, schedules, statements, and other documents required to be filed
by it under the Exchange Act since at least December 31, 2003, as such documents
have been amended since the time of the filing thereof and a copy of the
Registration Statement (collectively, including all forms, reports, schedules,
statements, and other documents filed by the Company therewith, the "SEC
Documents"). The SEC Documents, including, without limitation, any financial
statements and schedules included therein, at the time filed or, if subsequently
amended, as so amended, (i) did not contain any untrue statement of a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading and (ii) complied in all respects with the applicable
requirements of the Exchange Act and the applicable rules and regulations
thereunder.
(ii) The Company maintains disclosure controls and procedures required by
Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures are
effective to ensure that all material information concerning the Company and its
subsidiaries is made known on a timely basis to the individuals responsible for
the preparation of the Company's filings with the SEC and other public
disclosure documents. The Company has delivered to the Purchaser copies of, all
written descriptions of, and all policies, manuals and other documents
promulgating, such disclosure controls and procedures. To the Company's
knowledge, each director and executive officer thereof has filed with the SEC on
a timely basis all statements required by Section 16(a) of the Exchange Act and
the rules and regulations thereunder since at least December 31, 2003. As used
in this Section 2.01(a), the term "file" shall be broadly construed to include
any manner in which a document or information is furnished, supplied or
otherwise made available to the SEC.
(iii) The Chief Executive Officer and the Chief Financial Officer of the
Company have signed, and the Company has furnished to the SEC, all
certifications required by Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002; such certifications contain no qualifications or exceptions to the matters
certified therein and have not been modified or withdrawn; and neither the
Company nor any of its officers has received notice from any governmental entity
questioning or challenging the accuracy, completeness, form or manner of filing
or submission of such certifications.
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(iv) The Company has heretofore has provided to the Purchaser complete and
correct copies of all certifications filed with the SEC pursuant to Sections 302
and 906 of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and hereby reaffirms, represents and
warrants to the Purchaser the matters and statements made in such certificates.
(b) At the date hereof and at each Tranche Closing Date:
(i) the Common Stock is and shall be traded and quoted in the
over-the-counter Bulletin Board market (the "OTCBB");
(ii) the Company has and shall have performed or satisfied all of its
undertakings to, and of its obligations and requirements with, the Commission;
and
(iii) the Company has not, and shall not have taken any action that would
preclude, or otherwise jeopardize, the inclusion of the Common Stock for
quotation on the OTCBB.
(c) WorldWater Philippines, Inc., a Philippines corporation ("Subsidiary"), is
the sole subsidiary of the Company. Other than Subsidiary, the Company has no
subsidiaries or affiliated corporation or owns any interest in any other
enterprise (whether or not such enterprise is a corporation). Each of the
Company and Subsidiary has been duly organized and is validly existing as a
corporation in good standing under the laws of the respective jurisdiction of
its incorporation with full power and authority (corporate and other) to own,
lease and operate its respective properties and conduct its respective business
as described in the SEC Documents; each of the Company and Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the ownership or leasing of its respective properties
or the conduct of its respective business requires such qualification, except
where the failure to be so qualified or be in good standing would not have a
material adverse effect on the business, prospects, condition (financial or
otherwise), and results of operations of the Company and Subsidiary taken as a
whole; no proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification; each of the Company and Subsidiary is in possession
of, and operating in compliance with, all authorizations, licenses,
certificates, consents, orders and permits from state, federal, foreign and
other regulatory authorities that are material to the conduct of its business,
all of which are valid and in full force and effect; neither the Company nor
Subsidiary is in violation of its charter or bylaws or in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any material bond, debenture, note or other evidence of
indebtedness, or in any material lease, contract, indenture, mortgage, deed of
trust, loan agreement, joint venture or other agreement or instrument to which
it is a party or by which it or its respective properties or assets may be
bound, which violation or default would have a material adverse effect on the
business, prospects, financial condition or results of operations of the Company
and Subsidiary taken as a whole; and neither the Company nor Subsidiary is in
violation of any law, order, rule, regulation, writ, injunction, judgment or
decree of any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or Subsidiary or over its
respective properties or assets, which violation would have a material adverse
effect on the business, prospects, financial condition or results of operations
of the Company and Subsidiary taken as a whole. The SEC Documents accurately
describe any corporation, association or other entity owned or controlled,
directly or indirectly, by the Company or Subsidiary.
(d) The Company has full legal right, power and authority to enter into each of
the Transaction Agreements and to perform the transactions contemplated hereby
and thereby. Each of the Transaction Agreements has been duly authorized,
executed and delivered by the Company and is a valid and binding agreement on
the part of the Company, enforceable in accordance with its respective terms;
the performance of each of the Transaction Agreements and the consummation of
the transactions herein or therein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
(i) any bond, debenture, note or other evidence of indebtedness, or under any
lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which the Company or Subsidiary is a
party or by which its respective properties or assets may be bound, (ii) the
charter or bylaws of the Company or Subsidiary, or (iii) any law, order, rule,
regulation, writ, injunction, judgment or decree of any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or Subsidiary or over its respective properties or assets, which
violation or default would have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and
Subsidiary taken as a whole. No consent, approval, authorization or order of, or
qualification with, any court, government or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or Subsidiary or over
its respective properties or assets is required for the execution and delivery
of any Transaction Agreement and the consummation by the Company of the
transactions herein and therein contemplated, except such as may be required
under the Securities Act or under state or other securities or blue sky laws,
all of which requirements have been, or in accordance therewith will be,
satisfied in all material respects.
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(e) There is not any pending or, to the best of the Company's knowledge,
threatened, action, suit, claim or proceeding against the Company or Subsidiary,
or any of its respective officers or any of its properties, assets or rights,
before any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or Subsidiary or over its officers
or properties or otherwise that (i) is reasonably likely to result in any
material adverse change in the business, prospects, financial condition or
results of operations of the Company and Subsidiary taken as a whole or might
materially and adversely affect their properties, assets or rights taken as a
whole, (ii) might prevent consummation of the transactions contemplated by the
Transaction Agreements, (iii) will be required to be disclosed in the
Registration Statement, except to the extent heretofore disclosed in the SEC
Documents, or (iv) alleging violation of any Federal or state securities laws.
(f) The authorized capital stock of the Company consists of 135,000,000 shares
of Common Stock, par value $.001 per share, of which 59,332,551 shares of Common
Stock are outstanding, and 10,000,000 shares of preferred stock, par value $.01
per share, of which 677,778 shares are outstanding. All outstanding capital
stock of Subsidiary is owned beneficially and of record by the Company. Each of
such outstanding shares of Common Stock and each outstanding share of capital
stock of Subsidiary, is duly and validly authorized, validly issued, fully paid,
and nonassessable, has not been issued and is not owned or held in violation of
any preemptive or similar right of stockholders. Except as disclosed in the SEC
Documents, (i) there is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance of, any
share of capital stock of, or any security or other instrument convertible into,
exercisable for, or exchangeable for capital stock of, the Company or
Subsidiary, except for an aggregate of 34,812,666 options and/or warrants
currently outstanding to acquire shares of Common Stock, and (ii) except as
described in the SEC Documents, there is outstanding no security or other
instrument convertible into or exchangeable for capital stock of the Company or
Subsidiary. The Shares and the Warrant Shares (as hereinafter defined) have been
duly authorized for issuance and sale to the Purchaser pursuant hereto and the
Warrants, respectively, and, when issued and delivered by the Company against
payment therefor in accordance with the terms of this Agreement and the relevant
Warrant or Warrants, respectively, will be duly and validly issued and fully
paid and nonassessable, and will be sold free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest of any kind; and no
preemptive or similar right, co-sale right, registration right, right of first
refusal or other similar right of stockholders exists with respect to any of the
Shares or Warrant Shares or the issuance and sale thereof other than those that
have been expressly waived prior to the date hereof and those that will
automatically expire upon the execution hereof. No further approval or
authorization of any stockholder, the Board of Directors of the Company or
others is required for the issuance and sale or transfer of the Shares, the
Warrants, or the Warrant Shares, except as may be required under the Securities
Act, the rules and regulations promulgated thereunder or under state or other
securities or blue sky laws. The description of the Company's stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted and exercised thereunder, set forth in the SEC Documents
accurately and fairly presents the information required to be shown with respect
to such plans, arrangements, options and rights under the Securities Act, the
Exchange Act, and the rules and regulations promulgated thereunder. Presently,
the Company does not have a sufficient number of authorized shares of its Common
Stock to cover the shares of Common Stock issuable upon the exercise of the
Warrants (the "Warrant Shares"). The Company will use its best efforts to obtain
shareholder approval for an increase in the Company's authorized Common Stock
and, upon such authorization, the Company will reserve, free of preemptive
rights and other similar contractual rights of stockholders, a sufficient number
of its authorized, but unissued, shares of its Common Stock to cover the Shares
and the Warrant Shares.
(g) Amper, Politziner & ▇▇▇▇▇▇, P.C. (the "Auditors"), which has examined the
consolidated financial statements of the Company, together with the related
schedules and notes, for the period from January 1, 2002 to December 31, 2002
and for the nine month period ended September 30, 2003, respectively, and
Civale, Silvestri, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC, which has examined the
consolidated financial statements of the Company, together with the related
schedules and notes, for the period from January 1, 2000 to December 31, 2000,
and January 1, 2001 to December 31, 2001,respectively, filed with the Commission
as a part of the SEC Documents, and which, pursuant to the rules and regulations
of the Commission are to be included in the Registration Statement, are
independent accountants within the meaning of the Securities Act, the Exchange
Act, and the rules and regulations promulgated thereunder; the audited
consolidated financial statements of the Company, together with the related
schedules and notes, and the unaudited financial information, forming part of
the SEC Documents, fairly present and will fairly present the financial position
and the results of operations of the Company at the respective dates and for the
respective periods to which they apply; and all audited consolidated financial
statements of the Company, together with the related schedules and notes, and
the unaudited consolidated financial information, filed with the Commission as
part of the SEC Documents, complied and will comply as to form in all material
respects with applicable accounting requirements and with the rules and
regulations of the Commission with respect hereto when filed, have been and will
be prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved except as may be otherwise
stated therein (except as may be indicated in the notes thereto or as permitted
by the rules and regulations of the Commission) and fairly present and will
fairly present, subject in the case of the unaudited consolidated financial
statements, to customary year end audit adjustments, the financial position of
the Company as at the dates thereof and the results of its operations and cash
flows. The procedures pursuant to which the aforementioned consolidated
financial statements have been audited are compliant with generally accepted
auditing standards. The selected and summary consolidated financial and
statistical data included in the SEC Documents present and will present fairly
the information shown therein and have been compiled on a basis consistent with
the audited consolidated financial statements presented therein. No other
financial statements or schedules are required to be included in the SEC
Documents. The financial statements referred to in this Section 2.01(g) contain
all certifications and statements required the SEC's Order, dated June 27, 2002,
pursuant to Section 21(a)(1) of the Exchange Act (File No. 4-460), Rule 13a-14
or 15d-14 under the Exchange Act, or 18 U.S.C. Section 1350 (Sections 302 and
906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002) with respect to the report relating
thereto. Since December 31, 2003,
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(i) There has at no time been a material adverse change in the financial
condition, results of operations, businesses, properties, assets, liabilities,
or future prospects of the Company and Subsidiary taken as a whole;
(ii) The Company has not authorized, declared, paid, or effected any
dividend or liquidating or other distribution in respect of its capital stock or
any direct or indirect redemption, purchase, or other acquisition of any stock
of the Company or Subsidiary.
(iii) Except as set forth in the SEC Documents, the operations and
businesses of the Company have been conducted in all respects only in the
ordinary course.
There is no fact known to the Company which materially adversely affects or in
the future (as far as the Company can reasonably foresee) may materially
adversely affect the financial condition, results of operations, businesses,
properties, assets, liabilities, or future prospects of the Company; provided,
however, that the Company expresses no opinion as to political or economic
matters of general applicability. The Company has made known, or caused to be
made known, to the accountants or auditors who have prepared, reviewed, or
audited the aforementioned consolidated financial statements all material facts
and circumstances which could affect the preparation, presentation, accuracy, or
completeness thereof.
(h) Subsequent to the respective dates as of which information is given in the
SEC Documents, there has not been (i) any material adverse change in the
business, prospects, financial condition or results of operations of the Company
and Subsidiary taken as a whole, (ii) any transaction committed to or
consummated that is material to the Company and Subsidiary taken as a whole,
(iii) any obligation, direct or contingent, that is material to the Company and
Subsidiary taken as a whole incurred by the Company or Subsidiary, except such
obligations as have been incurred in the ordinary course of business, (iv) any
change in the capital stock or outstanding indebtedness of the Company or
Subsidiary that is material to the Company and Subsidiary taken as whole, (v)
any dividend or distribution of any kind declared, paid, or made on the capital
stock of the Company, or (vi) any loss or damage (whether or not insured) to the
property of the Company or Subsidiary which has a material adverse effect on the
business, prospects, condition (financial or otherwise), or results of
operations of the Company and Subsidiary taken as a whole.
(i) Except as set forth in the SEC Documents, (i) each of the Company and
Subsidiary has good and marketable title to all properties and assets described
in the SEC Documents as owned by it, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest, other than such as
would not have a material adverse effect on the business, prospects, financial
condition or results of operations of the Company and Subsidiary taken as a
whole, (ii) the agreements to which the Company and Subsidiary is a party
described in the SEC Documents are legal, valid and binding agreements,
enforceable by the Company or Subsidiary, as applicable, in accordance with
their terms, and, to the best of the Company's knowledge, the other contracting
party or parties thereto are not in breach or default under any of such
agreements, and (iii) each of the Company and Subsidiary has valid and
enforceable leases for all properties described in the SEC Documents as leased
by it. Except as set forth in the SEC Documents, each of the Company and
Subsidiary owns or leases all such properties as are necessary to its respective
operations as now conducted and as described in the SEC Documents.
(j) Each of the Company and Subsidiary has timely filed all respective federal,
state, local and foreign tax returns required to be filed by it and has paid all
taxes shown thereon as due, and there is no tax deficiency that has been or, to
the best of the Company's knowledge, is likely to be asserted against the
Company or Subsidiary if audited, which might have a material adverse effect on
the business, prospects, financial condition or results of operations of the
Company and Subsidiary taken as a whole, and all tax liabilities are adequately
provided for on the books of the Company and Subsidiary.
(k) Each of the Company and Subsidiary maintains insurance with insurers of
recognized financial responsibility of the types and in the amounts generally
deemed adequate for its business including, but not limited to, insurance
covering real and personal property owned or leased by the Company or
Subsidiary, as applicable, against theft, damage, destruction, acts of
vandalism, and all other risks customarily insured against, all of which
insurance is in full force and effect; neither the Company nor Subsidiary has
been refused any insurance coverage sought or applied for; and neither the
Company not Subsidiary has reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the business,
prospects, condition, or results of operations of the Company and Subsidiary
taken as a whole.
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(l) No labor disturbance by the employees of the Company or Subsidiary exists
or, to the best of the Company's knowledge, is imminent. The Company is not
aware of any existing or imminent labor disturbance by the employees of any
principal suppliers or customers of the Company or Subsidiary that might be
expected to result in any material adverse change in the business, prospects,
financial condition, or results of operations of the Company and Subsidiary
taken as a whole. No collective bargaining agreement exists with any of the
Company's or Subsidiary's employees and, to the best of the Company's knowledge,
no such agreement is imminent.
(m) Each of the Company and Subsidiary owns or possesses adequate rights to use
all patents, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names, logos, and copyrights described or referred to in
the SEC Documents as owned by or used by it or that are necessary to conduct its
respective businesses as described in the SEC Documents; neither the Company nor
Subsidiary has received any notice of, or has knowledge of, any infringement of
or conflict with asserted rights of the Company or Subsidiary by others with
respect to any patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names, logos, or copyrights described or
referred to in the SEC Documents as owned by or used by it; and neither the
Company nor Subsidiary has received any notice of, or has knowledge of, any
infringement of, or conflict with, asserted rights of others with respect to any
patents, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names, logos, or copyrights described or referred to in the SEC
Documents as owned by or used by it or which, individually or in the aggregate,
in the event of an unfavorable decision, ruling or finding, would have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and Subsidiary taken as a whole.
(n) The Company has been advised concerning the Investment Company Act of 1940,
as amended (the "Investment Company Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future, to conduct
its affairs in such a manner as to ensure that it is not and will not become an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act and such rules and regulations.
(o) Neither the Company nor Subsidiary has, and no person or entity acting on
behalf or at the request of the Company or Subsidiary has, at any time during
the last five years (i) made any unlawful contribution to any candidate for
foreign office or failed to disclose fully any contribution in violation of law,
or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any other applicable jurisdiction.
(p) Neither the Company nor Subsidiary, nor any person acting on behalf thereof,
has taken or will take, directly or indirectly, any action designed to, or that
might reasonably be expected to cause or result in, stabilization in violation
of law, or manipulation, of the price of the Common Stock to facilitate the sale
or resale of the Shares or the Warrant Shares.
(q) [INTENTIONALLY OMITTED]
(r) Except as set forth in the SEC Documents, (i) each of the Company and
Subsidiary is in compliance in all material respects with all rules, laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental Laws")
that are applicable to its business, (ii) neither the Company nor Subsidiary has
received notice from any governmental authority or third party of an asserted
claim under Environmental Laws, which claim is required to be disclosed in the
SEC Documents, (iii) to the best knowledge of the Company, neither the Company
nor Subsidiary is likely to be required to make future material capital
expenditures to comply with Environmental Laws (iv) no property which is owned,
leased or occupied by the Company or Subsidiary has been designated as a
Superfund site pursuant to the Comprehensive Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. 9601, et seq.), or otherwise
designated as a contaminated site under applicable state or local law, and (v)
neither the Company nor Subsidiary is in violation of any federal or state law
or regulation relating to occupational safety or health.
6
(s) The books, records and accounts of each of the Company and Subsidiary
accurately and fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the Company
and Subsidairy, as applicable, all to the extent required by generally accepted
accounting principles. Each of the Company and Subsidiary maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(t) There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company or Subsidiary to, or for the benefit of, any of the
officers, directors, or director-nominees of the Company or Subsidiary or any of
the members of the families of any of them, except as disclosed in the SEC
Documents.
(u) Except for a 5% placement fee to ▇▇▇▇▇ Inc., neither the Company nor
Subsidiary has incurred any liability, direct or indirect, for finders' or
similar fees on behalf of or payable by the Company or Subsidiary or the
Purchaser in connection with the Transaction Agreements or any other transaction
involving the Company and the Purchaser.
(v) No stockholder of the Company has any right (which has not been waived or
has not expired by reason of lapse of time following notification of the
Company's intent to file the Registration Statement) to request or require the
Company to register the sale of any shares owned by such stockholder under the
Securities Act on the Registration Statement.
(w) Neither the Company or Subsidiary, nor, to the best knowledge of the
Company, any director, officer, agent, employee, or other person associated
with, or acting on behalf of, the Company or any Subsidiary, has, directly or
indirectly: used any corporate funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political activity; made
any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended;
or made any bribe, rebate, payoff, influence payment, kickback, or other
unlawful payment. The Company's internal accounting controls and procedures are
sufficient to cause the Company and Subsidiary to comply in all respects with
the Foreign Corrupt Practices Act of 1977, as amended.
(x) Except as disclosed in the SEC Documents, no director, officer, shareholder
or employee of the Company or Subsidiary has any interest, whether as an
employee, officer, director, shareholder, agent, independent contractor,
security holder, creditor, consultant, or otherwise (other than as less than 1%
shareholder of a publicly traded company), either directly or indirectly, in any
person (whether a corporation, partnership, limited partnership, limited
liability company, limited liability partnership, business trust, sole
proprietorship, or otherwise) that presently (i) provides any services or
designs, produces and/or sells any products or product lines, or engages in any
activity which is the same, similar to or competitive with any activity or
business in which the Company or Subsidiary is now engaged; (ii) is a supplier
of, customer of, creditor of, or has an existing contractual relationship with
the Company or Subsidiary; or (iii) has any direct or indirect interest in any
asset or property used by the Company or Subsidiary or any property, real or
personal, tangible or intangible, that is necessary or desirable for the conduct
of the business of the Company or the Subsidiary. Except as disclosed in the SEC
Documents, no current or former stockholder, director, officer or employee of
any member of the Company or Subsidiary or any affiliate thereof, is at present,
or since the inception of the Company has been, directly or indirectly through
his affiliation with any other person, a party to any transaction (other than as
an employee) with the Company or Subsidiary providing for the furnishing of
services by, or rental of real or personal property from, or otherwise requiring
cash payments to any such person.
7
(y) (i) The Company is in compliance with, and is not in violation of,
applicable federal, state, local or foreign statutes, laws and regulations
(including without limitation, any applicable building, zoning or other law,
ordinance or regulation) affecting its properties or the operation of its
business. The Company is not subject to any order, decree, judgment or other
sanction of any court, administrative agency or other tribunal.
(ii) Each of The Company, its directors and its senior financial officers has
consulted with the Company's independent auditors and with the Company's outside
counsel with respect to, and (to the extent applicable to the Company) is
familiar in all material respects with all of the requirements of,
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002. The Company is in compliance with the provisions of
such act applicable to it as of the date hereof and has implemented such
programs and has taken reasonable steps, upon the advice of the Company's
independent auditors and outside counsel, respectively, to ensure the Company's
future compliance (not later than the relevant statutory and regulatory
deadlines therefore) with all provisions of such act which shall become
applicable thereto after the date hereof.
SECTION 2.02 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser represents and warrants to the Company as follows:
(a) The Purchaser is a limited liability company duly organized, validly
existing and in good standing under the laws of its jurisdiction of formation.
(b) The Purchaser has full legal right, power and authority to enter into
this Agreement and to perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Purchaser. The
execution, delivery and performance of this Agreement by the Purchaser and the
consummation of the transactions herein contemplated will not violate any
provision of the organizational documents of the Purchaser and will not result
in the creation of any lien, charge, security interest or encumbrance upon any
assets or property of the Purchaser pursuant to the terms or provisions of, or
will not conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Purchaser is a party or by which the
Purchaser or any of its assets or properties may be bound or affected or any
statute or any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental body
applicable to the Purchaser or any of its properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution, delivery and
performance by the Purchaser of this Agreement or the consummation by the
Purchaser of the transactions contemplated hereby. Assuming the valid execution
hereof by the Company, this Agreement will constitute the legal, valid and
binding obligation of the Purchaser, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Purchaser
in Section 3.03 hereof may be legally unenforceable.
(c) There are no legal or governmental actions, suits or proceedings
pending or, to the Purchaser's knowledge, threatened to which the Purchaser is
or may be a party which seeks to prevent or restrain the transactions
contemplated by this Agreement or to recover damages as a result of the
consummation of such transactions. To the knowledge of the Purchaser, the
Purchaser has not been and is not currently the subject of an investigation or
inquiry by the Commission, National Association of Securities Dealers, Inc.,
NASD Regulation, Inc., or any state securities commission.
(d) The Purchaser is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase of
the Shares, the Warrants, and the Warrant Shares, including investments in
securities issued by the Company. The Purchaser is an "accredited investor"
within the meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act. The Purchaser is not a "dealer" within the meaning of the
Securities Act or a "broker" or "dealer" within the meaning of the Exchange Act.
The Purchaser is able to bear the economic risk of loss of the Purchaser's
entire investment in the Shares, the Warrants, and the Warrant Shares.
(e) The Purchaser has requested, received, reviewed and considered all
information it deems relevant in making an informed decision to purchase the
Shares and the Warrants. The Purchaser understands that the Company is still in
the development stage and does not have operating revenues.
8
(f) The Purchaser is acquiring the Shares and the Warrants in the ordinary
course of its business and for its own account for investment only and with no
present intention of distributing any of such Shares in violation of the
Securities Act or entering into any arrangement or understanding with any other
person regarding the distribution of such Shares in violation of the Securities
Act (it being understood that the foregoing does not limit the Purchaser's right
to sell Shares pursuant to the Registration Statement).
(g) Except for the representations and warranties contained in this
Section 2.02, the Purchaser makes no representation or warranty to the Company,
express or implied, in connection with the transactions contemplated by this
Agreement.
SECTION 2.03 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates delivered pursuant hereto shall
survive the execution of this Agreement, the termination of Purchaser's
obligations to purchase the Shares, and the delivery to the Purchaser of the
Shares and the Warrants being purchased and the payment therefor
ARTICLE III
COVENANTS
SECTION 3.01 COVENANTS OF THE COMPANY.
(a) (i) As soon as practicable, but in any event no later than 60 days
following the date of this Agreement, the Company shall prepare and file with
the Commission a registration statement on Form SB-2 or other applicable form as
determined by the Company (the "Registration Statement") for the purpose of
registering the sale of the Shares by the Purchaser from time to time on the
facilities of any securities exchange or trading system on which the Common
Stock is then traded or in privately-negotiated transactions, which Registration
Statement shall contain all material non-public information disclosed to the
Purchasers by the Company in connection with the issuance and sale of the
Shares. For purposes of this Section 3.01(a), the term "Shares" shall include
any other securities of the Company issued in exchange for the Shares, as a
dividend on the Shares or in connection with a stock split or other
reorganization transaction affecting the Shares. The Company shall use its
commercially reasonable efforts to cause the Registration Statement to become
effective as soon as practicable.
(ii) The Company shall prepare and file with the Commission such
amendments and supplements to the Registration Statement and the prospectus
forming a part thereof as may be necessary to keep the Registration Statement
effective until the earliest date, after the date on which all of the Shares
have been purchased pursuant to this Agreement or the obligation of the
Purchaser to purchase the Shares pursuant to this Agreement has been terminated,
on which (i) all the Shares have been disposed of pursuant to the Registration
Statement, (ii) all of the Shares then held by the Purchaser may be sold under
the provisions of Rule 144 without limitation as to volume, whether pursuant to
Rule 144(k) or otherwise, or (iii) the Company has determined that all Shares
then held by the Purchaser may be sold without restriction under the Securities
Act and has removed any stop transfer instructions relating to such Shares and
offered to cause to be removed any restrictive legends on the certificates, if
any representing such Shares (the period between the Effective Date and the
earliest of such dates is referred to herein as the "Registration Period"). At
any time after the end of the Registration Period, the Company may withdraw the
Registration Statement and its obligations under this Section 3.01(a) shall
automatically terminate.
(iii) The Company shall not be obligated to prepare and to file a
post-effective amendment or supplement to the Registration Statement or the
prospectus constituting a part thereof during the continuance of a Blackout
Event; provided, however, that no Blackout Event may be deemed to exist for more
than 60 days. A "Blackout Event" means any of the following: (a) the possession
by the Company of material information that is not ripe for disclosure in a
registration statement or prospectus, as determined reasonably and in good faith
by the Chief Executive Officer or the Board of Directors of the Company or that
disclosure of such information in the Registration Statement or the prospectus
constituting a part thereof would be materially detrimental to the business and
affairs of the Company; or (b) any material engagement or activity by the
Company which would, in the reasonable and good faith determination of the Chief
Executive Officer or the Board of Directors of the Company, be materially
adversely affected by disclosure in a registration statement or prospectus at
such time. Without the express written consent of the Purchaser, if required to
permit the continued sale of Shares by the Purchaser, a post-effective amendment
or supplement to Registration Statement or the prospectus constituting a part
thereof must be filed no later than the 61st day following commencement of a
Blackout Event. In the event that the filing of the Registration Statement or
such effectiveness shall not take place within the time period heretofore set
forth, the Company shall issue to the holders of the securities described above
and/or issuable upon the exercise thereof (the "Underlying Shares") additional
shares of Common Stock and warrants in such number as shall equal 1% of the
number of shares of Common Stock, warrants, and/or Underlying Shares held by
such holder per each 30 days, or part thereof, after the aforementioned time
periods until the such filing and/or effectiveness, as applicable, shall take
place. The Company shall cause the Registration Statement to remain effective
until the earlier of (i) the sale by the Investor of all of the aforementioned
securities and (ii) the date upon which the Investor may dispose of all of such
securities without regard to the limitations set forth in paragraph (e) of Rule
144 under the Securities Act.
9
(iv) At least five (5) Business Days prior to the filing with the
Commission of the Registration Statement (or any amendment thereto) or the
prospectus forming a part thereof (or any supplement thereto), the Company shall
provide draft copies thereof to the Purchaser and shall consider incorporating
into such documents such comments as the Purchaser (and its counsel) may propose
to be incorporated therein. Notwithstanding the foregoing, no prospectus
supplement, the form of which has previously been provided to the Purchaser,
need be delivered in draft form to the Purchaser.
(v) The Company shall promptly notify the Purchaser upon the
occurrence of any of the following events in respect of the Registration
Statement or the prospectus forming a part thereof: (i) receipt of any request
for additional information from the Commission or any other federal or state
governmental authority during the Registration Period, the response to which
would require any amendments or supplements to the Registration Statement or
related prospectus; (ii) the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose; or (iii) receipt of any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Shares for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(vi) The Company shall furnish to the Purchaser with respect to the
Shares registered under the Registration Statement (and to each underwriter, if
any, of such Shares) such number of copies of prospectuses and such other
documents as the Purchaser may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Shares by the Purchaser
pursuant to the Registration Statement.
(vii) The Company shall file or cause to be filed such documents as
are required to be filed by the Company for normal state securities law or "blue
sky" clearance in states specified in writing by the Purchaser; provided,
however, that the Company shall not be required to qualify to do business or
consent to service of process in any jurisdiction in which it is not now so
qualified or has not so consented.
(viii) With a view to making available to the Purchaser the benefits
of Rule 144, the Company agrees, from the date hereof and throughout the
Registration Period and so long as the Purchaser owns Shares purchased pursuant
to this Agreement, to:
(A) comply with the provisions of paragraph (c)(1) of Rule
144; and
(B) file with the Commission in a timely manner all reports
and other documents required to be filed by the Company pursuant to Section 13,
14 or 15(d) under the Exchange Act; and, if at any time it is not required to
file such reports but in the past had been required to or did file such reports,
it will, upon the request of the Purchaser, make available other information as
required by, and so long as necessary to permit sales of its Shares pursuant to,
Rule 144.
10
(ix) The Company shall bear all expenses incurred by it in
connection with the procedures in paragraphs (i) through (ix) of this Section
3.01(a) and the registration of the Shares pursuant to the Registration
Statement and qualification of the shares under applicable state securities
laws. The Company shall not be responsible for any expenses incurred by the
Purchaser in connection with its sale of the Shares or its participation in the
procedures in paragraphs (i) through (ix) of this Section 3.01(a), including,
without limitation, any fees and expenses of counsel or other advisers to the
Purchaser and any underwriting discounts, brokerage fees and commissions
incurred by the Purchaser.
(b) (i) The Company may refuse to register (or permit its transfer agent
to register) any transfer of any Shares not made in compliance with the
Securities Act and for such purpose may place stop order instructions with its
transfer agent with respect to the Shares.
(c) So long as the Registration Statement is effective covering the resale
of Shares then still owned by the Purchaser, the Company shall furnish to the
Purchaser:
(i) as soon as practicable after available, one copy of (A) its
Annual Report to Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted accounting principles
by a firm of certified public accountants), (B) upon written request, its Annual
Report on Form 10-KSB, (C) upon written request, its Quarterly Reports on Form
10-QSB, (D) upon written request, its Current Reports on Form 8-K, and (E) a
full copy of the Registration Statement (the foregoing, in each case, excluding
exhibits); and
(ii) upon the written request of the Purchaser, all exhibits
excluded by the parenthetical to subparagraph (i)(E) of this Section 3.01(d).
(d) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar (which may be the same
entity as the transfer agent) for its Common Stock, which transfer agent and
registration shall be reasonably satisfactory to the Purchaser.
(e) If at any time prior to the termination of the Registration Period,
any rumor, publication or event relating to or affecting the Company shall occur
as a result of which, in the reasonable opinion of the Purchaser, the market
price of the Common Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to, or amendment of, the Prospectus), the Company will, if reasonably
requested by the Purchaser, forthwith prepare, and, if permitted by law,
disseminate a press release or other public statement, reasonably satisfactory
to the Purchaser, responding to or commenting on such rumor, publication or
event.
(f) The Company shall comply with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the
regulations promulgated pursuant thereto if it is not in compliance at the date
hereof.
(g) [INTENTIONALLY OMITTED]
(h) Until the earlier of the termination of this Agreement and the Closing
of the purchase of the final Tranche Shares hereunder (the earlier of such
events, the "Release Time"), no amendment will be made in the certificate of
incorporation or by-laws (or, in each case, the comparable charter documents, if
any, under applicable law) of the Company, other than as described in Section
2.01(f) hereof.
(i) Until the Release Time, no share of capital stock of the Company,
option or warrant for any such share, right to subscribe to or purchase any such
share, or security convertible into, or exchangeable or exercisable for, any
such share, shall be issued or sold by the Company, otherwise than as
contemplated by, or in connection with, this Agreement.
(j) Until the Release Time, no dividend or liquidating or other
distribution or stock split shall be authorized, declared, paid, or effected by
the Company in respect of the outstanding shares of capital stock of the
Company. Until the Release Time, no direct or indirect redemption, purchase, or
other acquisition shall be made by the Company or any affiliate thereof of
shares of capital stock of the Company.
(k) Until the Release Time, the Company will afford the officers,
directors, employees, counsel, agents, investment bankers, accountants, and
other representatives of the Purchaser free and full access to the plants,
properties, books, and records of the Company, will permit them to make extracts
from and copies of such books and records, and will from time to time furnish
the Purchaser with such additional financial and operating data and other
information as to the business, prospects, financial condition, and results of
operations of the Company as the Purchaser from time to time may request. Until
the Release Time, the Company will cause the independent certified public
accountants thereof to make available to the Purchaser and its independent
certified public accountants the work papers relating to the audits of the
Company referenced in this Agreement.
(l) Until the Release Time, the Company will conduct its affairs so that
at each Closing, no representation or warranty of the Company will be inaccurate
in any material respect, no covenant or agreement of Lighthouse will be
breached, and no condition in this Agreement will remain unfulfilled by reason
of the actions or omissions of the Company. Except as otherwise consented to by
the Purchaser in writing, until the Release Time, the Company will use its best
efforts to preserve the business operations of the Company intact, to keep
available the services of its present personnel, to preserve in full force and
effect the contracts, agreements, instruments, leases, licenses, arrangements,
and understandings of the Company, and to preserve the good will of its
suppliers, customers, and others having business relations with any of them.
Until the Release Time, the Company will conduct its affairs in all respects
only in the ordinary course, other than in connection with the matters
referenced herein.
11
(m) Until the Release Time, the Company will immediately advise the
Purchaser in a detailed written notice of any material fact or occurrence or any
pending or threatened material occurrence of which it obtains knowledge and
which (if existing and known at the date of the execution of this Agreement)
would have been required to be set forth or disclosed in or pursuant to this
Agreement, which (if existing and known at any time prior to or at the relevant
Tranche Closing) would make the performance by any party of a covenant contained
in this Agreement impossible or make such performance materially more difficult
than in the absence of such fact or occurrence, or which (if existing and known
at the time of the applicable Tranche Closing) would cause a condition to any
party's obligations under this Agreement not to be fully satisfied.
(n) Before the Company releases any information concerning this Agreement
or any of the transactions contemplated by this Agreement which is intended for,
or may result in, public dissemination thereof, the Company shall cooperate with
the Purchaser, shall furnish drafts of all documents or proposed oral statements
to the Purchaser for comment, and shall not release any such information without
the written consent of Purchaser, which consent shall not be unreasonably
withheld. Nothing contained herein shall prevent the Company from releasing any
information if required to do so by law.
(o) The Company shall timely prepare and file any declaration or filing
necessary to comply with any transfer tax statutes that require any such filing
before the relevant Tranche Closing.
(p) The Company shall obtain make such state securities law or "blue sky"
filings and obtain such state securities law or "blue sky" filings as shall be
reasonably requested by the Purchaser, provided, however, that the Company shall
not be required to qualify to do business or to become subject to general
service of process in any such jurisdiction.
SECTION 3.02 COVENANTS OF THE PURCHASER.
(a) The Purchaser agrees to comply in all material respects with all
federal and state securities laws and the rules and regulations promulgated
thereunder in connection with any sale by it of the Shares, the Warrants and the
Warrant Shares, whether or not such sale is pursuant to the Registration
Statement. In connection with the sale of any Shares pursuant to the
Registration Statement, but without limiting the generality of the foregoing
sentence, the Purchaser shall (i) comply with the provisions of Regulation M
promulgated under the Exchange Act, and (ii) deliver to the purchaser of Shares
the prospectus forming a part of the Registration Statement and all relevant
supplements thereto which have been provided by the Company to the Purchaser on
or prior to the applicable delivery date.
(b) The Purchaser will cooperate with the Company in all material respects
in connection with the performance by the Company of its obligations under
Section 3.01(a), including timely supplying all information reasonably requested
by the Company (which shall include all information regarding the Purchaser, and
any person who beneficially owns Shares held by the Purchaser within the meaning
of Rule 13d-3 promulgated under the Exchange Act, and the proposed manner of
sale of the Shares required to be disclosed in the Registration Statement) and
executing and returning all documents reasonably requested in connection with
the registration and sale of the Shares. The Purchaser hereby consents to be
named as an underwriter in the Registration Statement, if applicable, in
accordance with current Commission policy and, if necessary, to join in the
request of the Company for the acceleration of the effectiveness of the
Registration Statement.
(c) Neither the Purchaser nor any entity controlling it, under its control
or under common control with it has, prior to the execution of this Agreement,
and will not, for a period of 18 months following the execution of this
Agreement, carry a net short position in the Common Stock of the Company,
participate in any short selling activities, recommendations, or collusion,
directly or indirectly, as such activities relate to the Common Stock. A net
short position will include any derivative instruments such as a put option,
collar, swap or any other instrument which would result in a net short position.
(d) In connection with the sale of any Shares pursuant to the Registration
Statement, the Purchaser shall deliver to the purchaser thereof the prospectus
forming a part of the Registration Statement and all relevant supplements
thereto which have been provided by the Company to the Purchaser on or prior to
the applicable delivery date, all in accordance with the requirements of the
Securities Act and the rules and regulations promulgated thereunder and any
applicable blue sky laws. Unless such untrue statement or omission relates to a
Blackout Event, the Company shall file a post-effective amendment or prospectus
supplement as promptly as practicable, but in no event later than five Business
Days following the discovery of such untrue statement or omission.
12
(e) If at any time or from time to time after the Effective Date, the
Company notifies the Purchaser in writing that the Registration Statement or the
prospectus forming a part thereof (taking into account any prior amendments or
supplements thereto) contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading, the Purchaser shall
not offer or sell any Shares or engage in any other transaction involving or
relating to the Shares (other than purchases of Shares pursuant to this
Agreement), from the time of the giving of notice with respect to such untrue
statement or omission until the Purchaser receives written notice from the
Company that such untrue statement or omission no longer exists or has been
corrected or disclosed in an effective post-effective amendment to the
Registration Statement or a valid prospectus supplement to the prospectus
forming a part thereof.
(f) The Purchaser acknowledges and understands that the Shares, the
Warrants, and the Warrant Shares are (or upon the issuance thereof will be)
"restricted securities" as defined in Rule 144. The Purchaser hereby agrees not
to offer or sell (as such terms are defined in the Securities Act and the rules
and regulations promulgated thereunder) any Shares, Warrants, or Warrant Shares
unless such offer or sale is made (a) pursuant to an effective registration of
such securities under the Securities Act, or (b) pursuant to an available
exemption from the registration requirements of the Securities Act. The
Purchaser agrees that it will not engage in hedging transactions with regard to
the Shares, the Warrants, and the Warrant Shares other than in compliance with
the Securities Act. A proposed transfer shall be deemed to comply with this
Section 3.02(f) if the Purchaser delivers to the Company a legal opinion in form
and substance reasonably satisfactory to the Company from counsel reasonably
satisfactory to the Company to the effect that such transfer complies with this
Section 3.02(f).
SECTION 3.03 INDEMNIFICATION.
(a) For the purpose of this Section 3.03: (i) the term "Purchaser
Affiliate" shall mean any person who controls the Purchaser within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act; and (ii)
the term "Registration Statement" shall include any final prospectus, exhibit,
supplement or amendment included in or relating to the Registration Statement
referred to in Section 3.01(a).
(i) The Company agrees to indemnify and hold harmless the Purchaser
and each Purchaser Affiliate, against any losses, claims, damages, liabilities
or expenses, joint or several, to which such Purchaser or such Purchaser
Affiliate may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company, which consent shall not be
unreasonably withheld), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon (A) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, as amended as of the
Effective Date, including any information deemed to be a part thereof as of the
time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to
Rule 434 promulgated under the Securities Act, or the prospectus, in the form
first filed with the Commission pursuant to Rule 424(b) of the Regulations, or
filed as part of the Registration Statement at the time of effectiveness if no
Rule 424(b) filing is required (the "Prospectus"), or any amendment or
supplement thereto, (B) the omission or alleged omission to state in the
Registration Statement as of the Effective Date a material fact required to be
stated therein or necessary to make the statements in the Registration Statement
or any post-effective amendment or supplement thereto, or in the Prospectus or
any amendment or supplement thereto, not misleading, in each case in the light
of the circumstances under which the statements contained therein were made, or
(C) any inaccuracy in the representations and warranties of the Company
contained in this Agreement, or any failure of the Company to perform its
obligations hereunder, and will reimburse the Purchaser and each such Purchaser
Affiliate for any legal and other expenses as such expenses which are reasonably
incurred by the Purchaser or such Purchaser Affiliate in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon (A) an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, the prospectus included therein, or any amendment or
supplement thereto in reliance upon, and in conformity with, written information
furnished to the Company by the Purchaser expressly for use therein, or (B) the
failure of the Purchaser to comply with the covenants and agreements contained
in Section 3.02 hereof, or (C) the inaccuracy of any representations made by the
Purchaser herein or (D) any statement or omission in any Prospectus that is
corrected or disclosed in any subsequent Prospectus that was delivered to the
Purchaser prior to the pertinent sale or sales by the Purchaser.
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(ii) The Purchaser agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Securities Act and the Exchange Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser) insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon (A) any failure to comply with the covenants and agreements
contained in Section 3.02 hereof, (B) the inaccuracy of any representation made
by the Purchaser herein, or (C) any (I) untrue or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or (II) omission or alleged omission to
state in the Registration Statement, the Prospectus or any amendment or
supplement thereto a material fact required to be stated therein or necessary to
make the statements in the Registration Statement or any amendment or supplement
thereto, in the prospectus included therein, or any amendment or supplement
thereto, not misleading, in each case in the light of the circumstances under
which they were made; provided, that the Purchaser's indemnification obligation
under this clause (C) shall apply to the extent, and only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, such prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by the Purchaser expressly for use therein,
and will reimburse the Company, each of its directors, each of its officers who
signed the Registration Statement or controlling person for any legal and other
expense reasonably incurred by the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action.
(iii) Promptly after receipt by an indemnified party under this
Section 3.03 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 3.03, promptly notify the indemnifying
party in writing thereof; provided, that the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party for indemnification and contribution (except as provided
in paragraph (iv)) or otherwise than under the indemnity agreement contained in
this Section 3.03 or to the extent it is not materially prejudiced as a result
of such failure. In case any such action is brought against any indemnified
party and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 3.03 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless the indemnifying
party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after notice
of commencement of action, in which case the reasonable fees and expenses of
counsel shall be at the expense of the indemnifying party or both the Company
and Purchaser, in the reasonable opinion of counsel to the Purchaser, have
defenses distinct from, or contradictory to, the defenses available to the
other.
(iv) If the indemnification provided for in this Section 3.03 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(i) or (ii) of this Section 3.03 in respect to any losses, claims, damages,
liabilities or expenses referred to herein (subject to the limitation of
paragraph (iii) of this Section 3.03), then each applicable indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of any losses, claims, damages, liabilities or expenses referred to
herein (I) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the sale of the Common Stock
contemplated by this Agreement or (II) if the allocation provided by clause (I)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (I) above but
the relative fault of the Company and the Purchaser in connection with the
statements or omissions or inaccuracies in the representations and warranties in
this Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Purchaser on the other
shall be deemed to be in the same proportion as the amount paid by the Purchaser
to the Company pursuant to this Agreement for the Shares purchased by the
Purchaser that were sold pursuant to the Registration Statement bears to the
difference (the "Difference") between the amount such Purchaser paid for the
Shares that were sold pursuant to the Registration Statement and the amount
received by such Purchaser from such sale. The relative fault of the Company on
the one hand and the Purchaser on the other shall be determined by reference to,
among other things, whether the untrue or alleged statement of a material fact
or the omission or alleged omission to state a material fact or the inaccurate
or the alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by the Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, omission or inaccuracy. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
paragraph (iii) of this Section 3.03, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in paragraph (iii) of this Section
3.03 with respect to the notice of the threat or commencement of any threat or
action shall apply if a claim for contribution is to be made under this
paragraph (iv); provided, however, that no additional notice shall be required
with respect to any threat or action for which notice has been given under
paragraph (iii) for purposes of indemnification. The Company and each Purchaser
agree that it would not be just and equitable if contribution pursuant to this
Section 3.03 were determined solely by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section
3.03, the Purchaser shall not be required to contribute any amount in excess of
the amount by which the Difference exceeds the amount of any damages that such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
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SECTION 3.04 OPTION. During the one month period commencing on the Tranche
Closing Date relating to the final Tranche under this Agreement, the Company
shall have the right to require the Purchaser to execute and deliver an
agreement substantially identical hereto establishing a transaction structure
(including, without limitation, tranche size, pricing, etc.) identical to the
transaction structure set forth herein, including the pricing terms set forth
herein.
ARTICLE IV
CONDITIONS TO CLOSING
SECTION 4.01 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The
obligation of the Purchaser to purchase Tranche Shares at a Closing shall be
subject to the satisfaction of the following conditions, or the waiver of such
conditions by the Purchaser, at or prior to the applicable Tranche Closing Date:
(a) the representations and warranties of the Company set forth in
Section 2.01 of this Agreement shall be true and correct with the same force and
effect as though expressly made on every date during the term of this Agreement,
including each Tranche Closing Date, except for representations or warranties
made as of a particular date which representations and warranties shall be true
and correct as of such date;
(b) the Company shall have complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Tranche Closing Date;
(c) the Company shall have delivered to the Purchaser a certificate
executed by the Chairman of the Board or President and the chief financial or
accounting officer of the Company, dated the applicable Tranche Closing Date, to
the effect that the conditions in clauses Section 4.01(a), (b), (h), (i), and
(j) have been satisfied;
(d) the Registration Statement shall have been declared by the
Securities and Exchange Commission (the "Commission") to be effective under the
Securities Act on or prior to August 1, 2004 and shall not have been withdrawn,
no stop order suspending the effectiveness of the Registration Statement shall
be in effect, and no proceedings for the suspension of the effectiveness of the
Registration Statement shall have been instituted or threatened by the
Commission;
(e) Salvo ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, shall
have delivered its legal opinion to the Purchaser in form and substance
satisfactory to the Purchaser.
and
(f) there shall not have been (i) any domestic or international
event, act, or occurrence, including, without limitation, event, act, or
occurrence of terrorism, that shall have materially and adversely disrupted, or,
in the opinion of the Purchaser, will in the immediate future materially and
adversely disrupt, the securities markets; or (ii) a general suspension of, or a
general limitation on prices for, trading in securities on the New York Stock
Exchange or the American Stock Exchange or in the over-the-counter market; or
(iii) an outbreak or increase in the level of major hostilities or other
national or international calamity; or (iv) a banking moratorium declared by any
state or federal authority; or (v) a moratorium in foreign exchange trading by
major international banks or persons declared; or (vi) a material interruption
in the mail service or other means of communication within the United States; or
(vii) a material or substantial loss suffered by the Company by fire, flood,
accident, hurricane, earthquake, theft, sabotage, or other calamity or malicious
act, whether or not such loss shall have been insured, or from any labor dispute
or court or government action, order, or decree, which will, in the discretion
of the Purchaser, make it inadvisable to proceed with any portion of the
transactions contemplated hereby; or (viii) any material adverse change in the
business, prospects, financial condition, or results of operations of the
Company; or (ix) any material governmental restrictions shall have been imposed
on trading in securities in general, which restrictions are not in effect on the
date hereof; or (x) passed by the Congress of the United States or by any state
legislature any act or measure, or adopted by any governmental body or
authoritative accounting institute or board, or any governmental executive, any
orders, rules, or regulations, which the Purchaser believes likely to have a
material adverse effect on the business, financial condition, or financial
statements of the Company or any of the Subsidiary or the market for the Common
Stock; or (xi) such material and adverse change in the market for the Company's
securities or securities in general or in political, financial, or economic
conditions as in the judgment of the Purchaser makes it inadvisable to proceed
with the transactions contemplated hereby.
15
(h) The Company shall have received state securities law or "blue
sky" clearance for the sale of the Shares in states specified in writing by the
Purchaser, other than states in which such clearance shall have required the
Company to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented.
(i) A Blackout Period shall not be in effect at either the date of
the Tranche Election Notice or the Tranche Closing Date.
SECTION 4.02 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation
of the Company to sell Tranche Shares at any Closing shall be subject to the
satisfaction of the following conditions, or the waiver of such conditions by
the Company, at or prior to the applicable Tranche Closing Date:
(a) the representations and warranties of the Purchaser set forth in
Section 2.02 of this Agreement shall be true and correct with the same force and
effect as though expressly made on and as of such Tranche Closing Date, except
for representations or warranties made as of a particular date which
representations and warranties shall be true and correct as of such date;
(b) the Purchaser shall have complied with all the agreements hereunder
and satisfied all the conditions on its part to be performed or satisfied
hereunder at or prior to such Tranche Closing Date;
(c) the Purchaser shall have delivered to the Company a certificate
executed by a duly authorized officer of the Purchaser, dated the applicable
Tranche Closing Date, to the effect that the conditions in clauses (a) and (b)
of this Section 4.02 have been satisfied; and
(d) no stop order suspending the effectiveness of the Registration
Statement shall be in effect, and no proceedings for the suspension of the
effectiveness of the Registration Statement shall have been instituted or
threatened by the Commission.
ARTICLE V
TERMINATION
SECTION 5.01 TERMINATION BY PURCHASER. The Purchaser may terminate its
obligations under Article I of this Agreement by oral or written notice to the
Company following the occurrence of one or more of the following:
(a) the Company shall default in any material respect in the performance
of any covenant or agreement under this Agreement, which default shall continue
for more than three business days following written notice thereof from the
Purchaser;
(b) the representations and warranties of the Company set forth in Section
2.01 of this Agreement shall not be true and correct in all material respects as
of the date of this Agreement, and on each day thereafter (as if each such date
was a Tranche Closing Date), except for the representations and warranties made
as of a particular date which representations and warranties need be true and
correct only as of such date;
16
(c) the Company shall merge or consolidate with any Person, shall effect
any reorganization, or shall sell or substantially all of its assets, or shall
enter into any agreement contemplating the same;
(d) the Closing of the purchase and sale of the Tranche Shares shall not
have been completed by October 1, 2004;
(e) [INTENTIONALLY OMITTED]
(f) except pursuant to Stock Equivalents (as hereinafter defined)
outstanding on the date of this Agreement and disclosed in the SEC Documents,
the Company issues, or agrees to issue: (i) shares of Common Stock at a purchase
price less than the highest of the Tranche Purchase Prices; (ii) shares of
capital stock convertible into Common Stock; or (iii) Stock Equivalents with an
exercise or conversion price less than the highest of the Tranche Purchase
Prices (For purposes hereof "Stock Equivalents" shall mean options, warrants,
calls, rights, commitments, convertible securities and other securities pursuant
to which the holder, directly or indirectly, has the right to acquire (with or
without additional consideration) capital stock or equity of the Company; or
(g) the Company declares or pays any dividend or distribution to its
shareholders, or purchases or redeems any Common Stock.
SECTION 5.02 LIABILITY. The termination by the Purchaser of its
obligations under Article I of this Agreement shall not terminate any liability
for any breach or default by any party in any representation, warranty, covenant
or agreement occurring prior to the date of such termination. In addition, such
termination shall not terminate any of the obligations or agreements of either
party under Section 3.03 of this Agreement.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:
(a) if to the Company, to:
Worldwater Corp.
Pennington Business Park
▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Phone:(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(b) if to the Purchaser, to: SBI Brightline VIII LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Reitler ▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
17
SECTION 6.02 ASSIGNMENT. Neither party hereto may assign or delegate any
of such party's rights or obligations under or in connection with this
Agreement, and any attempted assignment or delegation of such rights or
obligations shall be void. Except as expressly provided in Section 3.03 with
respect to Purchaser Affiliates, directors and controlling persons of the
Company and officers of the Company who signed the Registration Statement, no
person, including without limitation any person who purchases or otherwise
acquires or receives any Shares from the Purchaser, is an intended third party
beneficiary of this Agreement, and no party to this Agreement shall have any
obligation arising under this Agreement to any person other than the other party
hereto and, to the extent expressly provided in Section 3.03, Purchaser
Affiliates, directors and controlling persons of the Company and officers of the
Company who signed the Registration Statement.
SECTION 6.03 CHANGES. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Purchaser.
SECTION 6.04 HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 6.05 SEVERABILITY. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 6.06 GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its conflicts of law principles, and the federal law of the United States of
America. The Company irrevocably consents to the jurisdiction of the courts of
the State of California and of any federal court, in each case located in Los
Angeles or Orange County, California in connection with any action or proceeding
arising out of, or relating to, this Agreement, any document or instrument
delivered pursuant to, in connection with, or simultaneously with this
Agreement, or a breach of this Agreement or any such document or instrument. In
any such action or proceeding, the Company waives personal service of any
summons, complaint, or other process and agrees that service thereof may be made
in accordance with Section 6.01. Within 30 days after such service, or such
other time as may be mutually agreed upon in writing by the attorneys for the
parties to such action or proceeding, the Company shall appear or answer such
summons, complaint, or other process. Should the Company fail to appear or
answer within such 30-day period or such extended period, as the case may be,
the Company shall be deemed in default and judgment may be entered against the
Company for the amount as demanded in any summons, complaint, or other process
so served.
SECTION 6.07 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
WORLDWATER CORP.
BY: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
NAME: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
TITLE: CHIEF EXECUTIVE OFFICER
SBI BRIGHTLINE VIII LLC
BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
NAME: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
TITLE: MANAGING MEMBER
19
SCHEDULE 1.01(A)
TRANCHES
--------
TRANCHE PURCHASE PRICE PER
NUMBER OF TRANCHE SHARES TRANCHE SHARE
TRANCHE NO. INCLUDED IN TRANCHE (U.S. DOLLARS)
----------- ------------------------ ---------------
1 7,000,000 $0.17
2 5,000,000 $0.22
3 5,000,000 $0.27
Exhibits A, B and C
NEITHER THE SECURITIES REPRESENTED HEREBY NOR THE SECURITIES ISSUABLE UPON THE
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED, SOLD, PLEDGED, ASSIGNED, OR OTHERWISE TRANSFERRED UNLESS (1) A
REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN
OPINION OF COUNSEL TO THE HOLDER OF THIS WARRANT OR SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THIS
WARRANT OR SUCH SECURITIES, AS APPLICABLE, MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED, OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR APPLICABLE STATE
SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.
WORLDWATER CORP.
Warrants for the Purchase
of
_________ Shares of Common Stock, Par Value $0.001 Per Share
No. ________
THIS CERTIFIES that, for consideration, the receipt and sufficiency
receipt and sufficiency are hereby acknowledged, and other value received,
________________ (the "Holder") is entitled to subscribe for, and purchase
from,WORLDWATER CORP. , a Delaware corporation (the "Company"), upon the terms
and conditions set forth herein, at any time or from time to time after the
Initial Exercise Date (as herein after defined) until 5:00 P.M. New York City
local time on the fifth anniversary of the Initial Exercise Date (the "Exercise
Period"), up to an aggregate of ___________ shares of common stock, par value
$0.001 per share (the "Common Stock"), of the Company. This Warrant is initially
exercisable at $[0.17][0.22][0.27] per share; provided, however, that upon the
occurrence of any of the events specified in Section 5 hereof, the rights
granted by this Warrant, including the exercise price and the number of shares
of Common Stock to be received upon such exercise, shall be adjusted as therein
specified. The term "Exercise Price" shall mean, depending on the context, the
initial exercise price (as set forth above) or the adjusted exercise price per
share.
This Warrant is the $[0.17][0.22][0.27] Warrant or one of the
$[0.17][0.22][0.27] Warrants (collectively, including any $[0.17][0.22][0.27]
Warrant issued upon the exercise or transfer of any such $[0.17][0.22][0.27]
Warrants in whole or in part, the "Warrants") issued pursuant to the Securities
Purchase Agreement, dated as of April 1, 2004 (the "Purchase Agreement"),
between the Company and SBI Brightline VIII LLC. As used herein, the term "this
Warrant" shall mean and include this Warrant and any Warrant or Warrants
hereafter issued as a consequence of the exercise or transfer of this Warrant in
whole or in part. This Warrant shall not be exercisable until the date six
months and one day following the date of the final Tranche Closing Date (as
defined in the Agreement). Each share of Common Stock issuable upon the exercise
hereof shall be hereinafter referred to as a "Warrant Share".
20
1. This Warrant may be exercised during the Exercise Period, either
in whole or in part, by the surrender of this Warrant (with the election at the
end hereof duly executed) to the Company at its office at WorldWater Corp.,
Pennington Business Park, ▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or at
such other place as is designated in writing by the Company, together with a
certified or bank cashier's check payable to the order of the Company in an
amount equal to the product of the Exercise Price and the number of Shares for
which this Warrant is being exercised.
2. Upon each exercise of the Holder's rights to purchase Warrant
Shares, the Holder shall be deemed to be the holder of record of the Shares,
notwithstanding that the transfer books of the Company shall then be closed or
certificates representing the Warrant Shares with respect to which this Warrant
was exercised shall not then have been actually delivered to the Holder. As soon
as practicable after each such exercise of this Warrant, the Company shall issue
and deliver to the Holder a certificate or certificates representing the Warrant
Shares issuable upon such exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a Warrant
evidencing the right of the Holder to purchase the balance of the aggregate
number of Warrant Shares purchasable hereunder as to which this Warrant has not
been exercised or assigned.
3. Any Warrants issued upon the transfer or exercise in part of this
Warrant shall be numbered and shall be registered in a warrant register (the
"Warrant Register") as they are issued. The Company shall be entitled to treat
the registered holder of any Warrant on the Warrant Register as the owner in
fact thereof for all purposes, and shall not be bound to recognize any equitable
or other claim to, or interest in, such Warrant on the part of any other person,
and shall not be liable for any registration of transfer of Warrants which are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith. This Warrant shall be transferable on the books of the Company only upon
delivery thereof duly endorsed by the Holder or by his duly authorized attorney
or representative, or accompanied by proper evidence of succession, assignment,
or authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his, her, or its authority shall be produced. Upon any registration
of transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof), upon surrender to the Company or its
duly authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations thereunder.
4. The Company shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of providing
for the exercise of the Warrants, such number of shares of Common Stock as
shall, from time to time, be sufficient therefor. The Company represents that
all shares of Common Stock issuable upon exercise of this Warrant are duly
authorized and, upon receipt by the Company of the full payment for such Warrant
Shares, will be validly issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof and will not be issued in
violation of any preemptive or similar rights of stockholders.
5. (a) The Exercise Price for the Warrants in effect from time to
time, and the number of shares of Common Stock issuable upon exercise of the
Warrants, shall be subject to adjustment, as follows:
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(i) In the event that the Company shall at any time after the date
hereof (A) declare a dividend on the outstanding Common Stock payable in shares
of its capital stock, (B) subdivide the outstanding Common Stock, (C) combine
the outstanding Common Stock into a smaller number of shares, or (D) issue any
shares of its capital stock by reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then, in each case, the Exercise
Price per Warrant Share in effect at the time of the record date for the
determination of stockholders entitled to receive such dividend or distribution
or of the effective date of such subdivision, combination, or reclassification
shall be adjusted so that it shall equal the price determined by multiplying
such Exercise Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such action, and the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such action. Such adjustment shall be made successively
whenever any event listed above shall occur and shall become effective at the
close of business on such record date or at the close of business on the date
immediately preceding such effective date, as applicable.
(ii) In addition to the foregoing, the Exercise Price and the number
of Warrant Shares issuable upon the exercise hereof shall be subject to
adjustment pursuant to Section 3.01(a)(iii) of the Purchase Agreement.
(b) As used in paragraph (f) hereof, the Current Market Price per share of
Common Stock on any date shall be deemed to be the average of the daily closing
prices for the 30 consecutive trading days immediately preceding the date in
question. The closing price for each day shall be the last reported sales price
regular way or, in case no such reported sale takes place on such day, the
closing bid price regular way, in either case on the principal national
securities exchange (including, for purposes hereof, the Nasdaq National Market)
on which the Common Stock is listed or admitted to trading or, if the Common
Stock is not listed or admitted to trading on any national securities exchange,
the highest reported bid price for the Common Stock as furnished by the National
Association of Securities Dealers, Inc. through the Nasdaq SmallCap Market or a
similar organization if the Nasdaq SmallCap Market is no longer reporting such
information. If, on any such date, the Common Stock is not listed or admitted to
trading on any national securities exchange and is not quoted on the Nasdaq
SmallCap Market or any similar organization, the Current Market Price shall be
deemed to be the fair value of a share of Common Stock on such date, as
determined in good faith by the Board of Directors of the Company, absent
manifest error.
(c) All calculations under this Section 5 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
(d) In any case in which this Section 5 shall require that an adjustment
in the number of Warrant Shares be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the Holder, if the Holder exercised this Warrant after such
record date, the Warrant Shares, if any, issuable upon such exercise over and
above the number of Warrant Shares issuable upon such exercise on the basis of
the number of shares of Common Stock outstanding or in effect prior to such
adjustment; provided, however, that the Company shall deliver to the Holder a
due ▇▇▇▇ or other appropriate instrument evidencing the Holder's right to
receive such additional shares of Common Stock upon the occurrence of the event
requiring such adjustment.
(e) Whenever there shall be an adjustment as provided in this Section 5,
the Company shall within 15 days thereafter cause written notice thereof to be
sent by registered or certified mail, postage prepaid, to the Holder, at its
address as it shall appear in the Warrant Register, which notice shall be
accompanied by an officer's certificate setting forth the number of Warrant
Shares issuable and the Exercise Price thereof after such adjustment and setting
forth a brief statement of the facts requiring such adjustment and the
computation thereof, which officer's certificate shall be conclusive evidence of
the correctness of any such adjustment absent manifest error.
(f) The Company shall not be required to issue fractions of shares of
Common Stock or other capital stock of the Company upon the exercise of this
Warrant. If any fraction of a share of capital stock would be issuable on the
exercise of this Warrant (or specified portions thereof), the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
Current Market Price of such share of Common Stock on the date of exercise of
this Warrant.
(g) No adjustment in the Exercise Price per Warrant Share shall be
required if such adjustment is less than $.005; provided, however, that any
adjustments which by reason of this Section 5 are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
22
6. (a) In case of any capital reorganization, other than in the cases
referred to in Section 5(a) hereof, or the consolidation or merger of the
Company with or into another corporation (other than a merger or consolidation
in which the Company is the continuing corporation and which does not result in
any reclassification of the outstanding shares of Common Stock or the conversion
of such outstanding shares of Common Stock into shares of other stock or other
securities or property), or in the case of any sale, lease, or conveyance to
another corporation of the property and assets of any nature of the Company as
an entirety or substantially as an entirety (such actions being hereinafter
collectively referred to as "Reorganizations"), there shall thereafter be
deliverable upon exercise of this Warrant (in lieu of the number of Warrant
Shares theretofore deliverable) the number of shares of stock or other
securities or property to which a holder of the respective number of Warrant
Shares which would otherwise have been deliverable upon the exercise of this
Warrant would have been entitled upon such Reorganization if this Warrant had
been exercised in full immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as determined in good faith by the Board
of Directors of the Company, shall be made in the application of the provisions
herein set forth with respect to the rights and interests of the Holder so that
the provisions set forth herein shall thereafter be applicable, as nearly as
possible, in relation to any shares or other property thereafter deliverable
upon exercise of this Warrant. Any such adjustment shall be made by, and set
forth in, a supplemental agreement between the Company, or any successor
thereto, and the Holder, with respect to this Warrant, and shall for all
purposes hereof conclusively be deemed to be an appropriate adjustment. The
Company shall not effect any such Reorganization unless, upon or prior to the
consummation thereof, the successor corporation, or, if the Company shall be the
surviving corporation in any such Reorganization and is not the issuer of the
shares of stock or other securities or property to be delivered to holders of
shares of the Common Stock outstanding at the effective time thereof, then such
issuer, shall assume by written instrument the obligation to deliver to the
Holder such shares of stock, securities, cash, or other property as such holder
shall be entitled to purchase in accordance with the foregoing provisions. In
the event of sale, lease, or conveyance or other transfer of all or
substantially all of the assets of the Company as part of a plan for liquidation
of the Company, all rights to exercise this Warrant shall terminate 30 days
after the Company gives written notice to the Holder and each registered holder
of a Warrant that such sale or conveyance or other transfer has been
consummated.
(b) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of this Warrant (other than a change in par
value or from a specified par value to no par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), the Holder or
holders of this Warrant shall have the right thereafter to receive upon exercise
of this Warrant solely the kind and amount of shares of stock and other
securities, property, cash, or any combination thereof receivable upon such
reclassification, change, consolidation, or merger by a holder of the number of
Warrant Shares for which this Warrant might have been exercised immediately
prior to such reclassification, change, consolidation, or merger. Thereafter,
appropriate provision shall be made for adjustments which shall be as nearly
equivalent as practicable to the adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
7. In case at any time the Company shall propose:
(a) to pay any dividend or make any distribution on shares of Common
Stock in shares of Common Stock or make any other distribution (other than
regularly scheduled cash dividends which are not in a greater amount per share
than the most recent such cash dividend) to all holders of Common Stock; or
(b) to issue any rights, warrants, or other securities to all
holders of Common Stock entitling them to purchase any additional shares of
Common Stock or any other rights, warrants, or other securities; or
(c) to effect any reclassification or change of outstanding shares
of Common Stock or any consolidation, merger, sale, lease, or conveyance of
property, as described in Section 6; or
(d) to effect any liquidation, dissolution, or winding-up of the
Company; or
23
(e) to take any other action which would cause an adjustment to the
Exercise Price per Warrant Share; then, and in any one or more of such cases,
the Company shall give written notice thereof by registered or certified mail,
postage prepaid, to the Holder at the Holder's address as it shall appear in the
Warrant Register, mailed at least 15 days prior to (i) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any such
dividend, distribution, rights, warrants, or other securities are to be
determined, (ii) the date on which any such reclassification, change of
outstanding shares of Common Stock, consolidation, merger, sale, lease,
conveyance of property, liquidation, dissolution, or winding-up is expected to
become effective and the date as of which it is expected that holders of record
of shares of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
change of outstanding shares, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution, or winding-up, or (iii) the date of such
action which would require an adjustment to the Exercise Price per Warrant
Share.
8. The issuance of any shares or other securities upon the exercise of
this Warrant and the delivery of certificates or other instruments representing
such shares or other securities shall be made without charge to the Holder for
any tax or other charge in respect of such issuance. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate in a name other
than that of the Holder, and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
9. (a) If, at any time during the seven-year period commencing on the date
of the Purchase Agreement, the Company shall file a registration statement
(other than on Form S-4, Form S-8 or any successor form) with the Securities and
Exchange Commission (the "Commission") while any Registrable Securities (as
hereinafter defined) are outstanding, the Company shall give all the then
holders of any Registrable Securities (the "Eligible Holders") at least 45 days
prior written notice of the filing of such registration statement. If requested
by any Eligible Holder in writing within 30 days after receipt of any such
notice, the Company shall, at the Company's sole expense (other than the fees
and disbursements of counsel for the Eligible Holders and the underwriting
discounts, if any, payable in respect of the Registrable Securities sold by any
Eligible Holder), register or qualify all or, at each Eligible Holder's option,
any portion of the Registrable Securities of any Eligible Holders who shall have
made such request, concurrently with the registration of such other securities,
all to the extent requisite to permit the public offering and sale of the
Registrable Securities, and will use its best efforts through its officers,
directors, auditors, and counsel to cause such registration statement to become
effective as promptly as practicable. Notwithstanding the foregoing, if the
managing underwriter of any such offering shall advise the Company in writing
that, in its opinion, the distribution of all or a portion of the Registrable
Securities requested to be included in the registration concurrently with the
securities being registered by the Company would materially adversely affect the
distribution of such securities by the Company for its own account, then any
Eligible Holder who shall have requested registration of his, her, or its
Registrable Securities shall delay the offering and sale of such Registrable
Securities (or the portions thereof so designated by such managing underwriter)
for such period, not to exceed 90 days (the "Delay Period"), as the managing
underwriter shall request, provided that no such delay shall be required as to
any Registrable Securities if any securities of the Company are included in such
registration statement and eligible for sale during the Delay Period for the
account of any person other than the Company and any Eligible Holder unless the
securities included in such registration statement and eligible for sale during
the Delay Period for such other person shall have been reduced pro rata to the
reduction of the Registrable Securities which were requested to be included and
eligible for sale during the Delay Period in such registration. As used herein,
"Registrable Securities" shall mean the Warrants and the Warrant Shares which,
in each case, have not been previously sold pursuant to a registration statement
or Rule 144 promulgated under the Act.
(b) If, on any two occasions during the seven-year period commencing
on the date of the Purchase Agreement, the Company shall receive a written
request from Eligible Holders who in the aggregate own (or upon exercise of all
Warrants or Warrants then outstanding would own) a majority of the total number
of shares of Common Stock then included (or upon such exercises would be
included) in the Registrable Securities (the "Majority Holders"), to register
the sale of all or part of such Registrable Securities, the Company shall, as
promptly as practicable, prepare and file with the Commission a registration
statement sufficient to permit the public offering and sale of the Registrable
Securities and will use its best efforts through its officers, directors,
auditors, and counsel to cause such registration statement to become effective
as promptly as practicable; provided, that the Company shall only be obligated
to file one such registration statement pursuant to this Section 9(b) for which
all expenses incurred in connection with such registration (other than the fees
and disbursements of counsel for the Eligible Holders and underwriting
discounts, if any, payable in respect of the Registrable Securities sold by the
Eligible Holders) shall be borne by the Company. Within five business days after
receiving any request contemplated by this Section 9(b), the Company shall give
written notice to all the other Eligible Holders, advising each of them that the
Company is proceeding with such registration and offering to include therein all
or any portion of any such other Eligible Holder's Registrable Securities,
provided that the Company receives a written request to do so from such Eligible
Holder within 30 days after receipt by him, her, or it of the Company's notice.
24
(c) In the event of a registration pursuant to the provisions of
this Section 9, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Holder or such holders
may reasonably request; provided, however, that the Company shall not be
required by reason of this Section 9(c) to register or qualify the Registrable
Securities in any jurisdiction where, as a result thereof, the Company would be
subject to service of general process or to taxation as a foreign corporation
doing business in such jurisdiction to which the Company is not then subject.
(d) The Company shall keep effective any registration or
qualification contemplated by this Section 9 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document, and communication for such period of
time as shall be required to permit the Eligible Holders to complete the offer
and sale of the Registrable Securities covered thereby. The Company shall in no
event be required to keep any such registration or qualification in effect for a
period in excess of nine months from the date on which the Eligible Holders are
first free to sell such Registrable Securities; provided, however, that, if the
Company is required to keep any such registration or qualification in effect
with respect to securities other than the Registrable Securities beyond such
period, the Company shall keep such registration or qualification in effect as
it relates to the Registrable Securities for so long as such registration or
qualification remains or is required to remain in effect in respect of such
other securities.
(e) In the event of a registration pursuant to the provisions of
this Section 9, the Company shall furnish to each Eligible Holder such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of copies
of each prospectus contained in such registration statement and each supplement
or amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Act and the rules and regulations thereunder,
and such other documents, as any Eligible Holder may reasonably request to
facilitate the disposition of the Registrable Securities included in such
registration.
(f) In the event of a registration pursuant to the provisions of
this Section 9, the Company shall furnish each Eligible Holder of any
Registrable Securities so registered with an opinion of its counsel (reasonably
acceptable to the Eligible Holders) to the effect that (i) the registration
statement has become effective under the Act and no order suspending the
effectiveness of the registration statement, or preventing or suspending the use
of the registration statement, any preliminary prospectus, any final prospectus
or any amendment or supplement thereto, has been issued, nor, to the knowledge
of such counsel, has the Commission or any securities or blue sky authority of
any jurisdiction instituted or threatened to institute any proceedings with
respect to such an order, (ii) the registration statement and each prospectus
forming a part thereof (including each preliminary prospectus), and any
amendment or supplement thereto, complies as to form with the Act and the rules
and regulations thereunder, and (iii) such counsel has no knowledge of any
material misstatement or omission in such registration statement or any
prospectus, as amended or supplemented. Such opinion shall also state the
jurisdictions in which the Registrable Securities have been registered or
qualified for sale pursuant to the provisions of Section 9(c).
(g) In the event of a registration pursuant to the provision of this
Section 9, the Company shall enter into a cross-indemnity agreement and a
contribution agreement, each in customary form, with each underwriter, if any,
and, if requested, enter into an underwriting agreement containing conventional
representations, warranties, allocation of expenses, and customary closing
conditions, including, without limitation, opinions of counsel and accountants'
cold comfort letters, with any underwriter who acquires any Registrable
Securities.
(h) The Company agrees that until all the Registrable Securities
have been sold under a registration statement or pursuant to Rule 144 under the
Act, it shall keep current in filing all reports, statements, and other
materials required to be filed with the Commission to permit holders of the
Registrable Securities to sell such securities under Rule 144 under the Act.
25
10. (a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Eligible Holder, its officers, directors,
partners, employees, agents, and counsel, and each person, if any, who controls
any such person within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all loss, liability, charge, claim, damage, and
expense whatsoever (which shall include, for all purposes of this Section 10,
without limitation, attorneys' fees and any and all expense whatsoever incurred
in investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), as and when incurred, arising out of, based upon,
or in connection with, (i) any untrue statement or alleged untrue statement of a
material fact contained in (A) any registration statement, preliminary
prospectus, or final prospectus (as from time to time amended and supplemented),
or any amendment or supplement thereto, relating to the offer and sale of any of
the Registrable Securities, or (B) any application or other document or
communication (in this Section 10, referred to collectively as an "application")
executed by, or on behalf of, the Company or based upon written information
furnished by, or on behalf of, the Company filed in any jurisdiction in order to
register or qualify any of the Registrable Securities under the securities or
"blue sky" laws thereof or filed with the Commission or any securities exchange;
or any omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon, and in conformity
with, written information furnished to the Company with respect to such Eligible
Holder by, or on behalf of, such person expressly for inclusion in any
registration statement, preliminary prospectus or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be, or
(ii) any breach of any representation, warranty, covenant, or agreement of the
Company contained in this Warrant. The foregoing agreement to indemnify shall be
in addition to any liability the Company may otherwise have, including
liabilities arising under this Warrant.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents, or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall not relieve the
Company from any liability other than pursuant to this Section 10(a)) and the
Company shall promptly assume the defense of such action, including, without
limitation, the employment of counsel reasonably satisfactory to such
indemnified party or parties) and payment of expenses. Such indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless the employment of such counsel shall have
been authorized in writing by the Company in connection with the defense of such
action or the Company shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties to have charge of the defense
of such action or the named parties to such action include both the indemnified
and the indemnifying parties and such indemnified party or parties shall have
reasonably concluded that there may be one or more legal defenses available to
it or them or to other indemnified parties which are different from, or in
addition to, those available to the Company, which, for reasons of conflict of
interest or otherwise, counsel to the Company is not in a position to assert, in
any of which events such reasonable fees and expenses shall be borne by the
Company and the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties. Anything in this Section
10 to the contrary notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its written consent,
which consent shall not be unreasonably withheld. The Company shall not, without
the prior written consent of each indemnified party that is not released as
described in this sentence, settle or compromise any action, or permit a default
or consent to the entry of judgment in, or otherwise seek to terminate, any
pending or threatened action, in respect of which indemnity may be sought
hereunder (whether or not any indemnified party is a party thereto), unless such
settlement, compromise, consent, or termination includes an unconditional
release of each indemnified party from all liability in respect of such action.
The Company agrees promptly to notify the Eligible Holders of the commencement
of any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of any Registrable Securities or any
preliminary prospectus, prospectus, registration statement, or amendment or
supplement thereto, or any application relating to any sale of any Registrable
Securities.
(b) Each Eligible Holder severally agrees to indemnify and hold
harmless the Company, each director of the Company, each officer of the Company
who shall have signed any registration statement covering Registrable Securities
held by such Eligible Holder, each other person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, and its or their respective counsel, to the same extent as
the foregoing indemnity from the Company to the Eligible Holders in Section
10(a), but only with respect to statements or omissions, if any, made in any
registration statement, preliminary prospectus, or final prospectus (as from
time to time amended and supplemented), or any amendment or supplement thereto,
or in any application, in reliance upon, and in conformity with, written
information furnished to the Company with respect to any Eligible Holder by, or
on behalf of, such Eligible Holder expressly for inclusion in any such
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be. If
any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus, or
final prospectus, or any amendment or supplement thereto, or any application,
and in respect of which indemnity may be sought against any Eligible Holder
pursuant to this Section 10(b), such Eligible Holder shall have the rights and
duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the indemnified parties,
by the provisions of Section 10(a).
26
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 10(a) or
10(b) hereof (subject to the limitations thereof), but it is found in a final
judicial determination, not subject to further appeal, that such indemnification
may not be enforced in such case, even though this Warrant expressly provides
for indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act, or otherwise, then the
Company (including for this purpose any contribution made by, or on behalf of,
any director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Eligible Holders of the Registrable
Securities included in such registration in the aggregate (including for this
purpose any contribution by, or on behalf of, an indemnified party), as a second
entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Eligible Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages, and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission, or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission relates to information supplied
by the Company or by such Eligible Holders, and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement, alleged statement, omission, or alleged omission. The Company and the
Eligible Holders agree that it would be unjust and inequitable if the respective
obligations of the Company and the Eligible Holders for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if the Eligible Holders and the
other indemnified parties were treated as one entity for such purpose) or by any
other method of allocation that does not reflect the equitable considerations
referred to in this Section 10(c). In no case shall any Eligible Holder be
responsible for a portion of the contribution obligation imposed on all Eligible
Holders in excess of its pro rata share based on the number of shares of Common
Stock owned (or which would be owned upon exercise of all Registrable
Securities) by it and included in such registration as compared to the number of
shares of Common Stock owned (or which would be owned upon exercise of all
Registrable Securities) by all Eligible Holders and included in such
registration. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. For purposes of
this Section 10(c), each person, if any, who controls any Eligible Holder within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act and each officer, director, partner, employee, agent, and counsel of each
such Eligible Holder or control person shall have the same rights to
contribution as such Eligible Holder or control person and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed any
such registration statement, each director of the Company, and its or their
respective counsel shall have the same rights to contribution as the Company,
subject in each case to the provisions of this Section 10(c). Anything in this
Section 10(c) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 10(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or otherwise.
11. Unless registered pursuant to the provisions of Section 9 hereof, the
Warrant Shares issued on exercise of the Warrants shall be subject to a stop
transfer order and the certificate or certificates representing the Warrant
Shares shall bear the following legend:
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED, ASSIGNED, OR
OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT
THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
HOLDER OF THIS WARRANT OR SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO THE COMPANY, THAT THIS WARRANT OR SUCH
SECURITIES, AS APPLICABLE, MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED, OR
OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR APPLICABLE STATE
SECURITIES LAWS.
12. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), and upon receipt by the Company of reasonably
satisfactory indemnification, the Company shall execute and deliver to the
Holder thereof a new Warrant of like date, tenor, and denomination.
13. The Holder of any Warrant shall not have, solely on account of such
status, any rights of a stockholder of the Company, either at law or in equity,
or to any notice of meetings of stockholders or of any other proceedings of the
Company, except as provided in this Warrant.
14. This Warrant shall be construed in accordance with the laws of the
State of California applicable to contracts made and performed within such
State, without regard to principles of conflicts of law.
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15. The Holder and the Company irrevocably consent to the jurisdiction of
the courts of the State of California and of any federal court, in each case
located in Los Angeles or Orange County, California, in connection with any
action or proceeding arising out of, or relating to, this Warrant, any document
or instrument delivered pursuant to, in connection with, or simultaneously with,
this Warrant, or a breach of this Warrant or any such document or instrument. In
any such action or proceeding, the Holder or the Company, as applicable, waives
personal service of any summons, complaint, or other process and agrees that
service thereof may be made in accordance with Section 6.01 of the Purchase
Agreement. Within 30 days after such service, or such other time as may be
mutually agreed upon in writing by the attorneys for the parties to such action
or proceeding, the Company shall appear to answer such summons, complaint, or
other process. Should the Company so served fail to appear or answer within such
30-day period or such extended period, as the case may be, the Company shall be
deemed in default and judgment may be entered against the Company for the amount
as demanded in any summons, complaint, or other process so served.
Dated: _______________, 2004
WORLDWATER CORP.
By: ____________________________________
Name:
Title:
[Seal]
----------------------
Secretary
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FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ______________________ hereby sells, assigns, and
transfers unto _________________ a Warrant to purchase __________ shares of
Common Stock, par value $0.001 per share, of WorldWater Corp., a Delaware
corporation (the "Company"), and does hereby irrevocably constitute and appoint
___________ attorney to transfer such Warrant on the books of the Company, with
full power of substitution.
Dated: _________________
Signature_______________________
NOTICE
The signature on the foregoing Assignment must correspond to the name as
written upon the face of this Warrant in every particular, without alteration or
enlargement or any change whatsoever.
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ELECTION TO EXERCISE
To: World Water Corp.
The undersigned hereby exercises his, her, or its rights to purchase
shares of Common Stock, par value $0.001 per share (the "Common Stock"), of
WorldWater Corp., a Delaware corporation (the "Company"), covered by the within
Warrant and tenders payment herewith in the amount of $____________ in
accordance with the terms thereof, and requests that certificates for the
securities constituting such shares of Common Stock be issued in the name of,
and delivered to:
(Print Name, Address, and Social Security
or Tax Identification Number)
and, if such number of shares of Common Stock shall not constitute all such
shares of Common Stock covered by the within Warrant, that a new Warrant for the
balance of the shares of Common Stock covered by the within Warrant shall be
registered in the name of, and delivered to, the undersigned at the address
stated below.
Dated: __________________ Name____________________________________
(Print)
Address:
----------------------------------------
(Signature)
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